News & Analysis

VC firm Andreessen Horowitz has raised $600 million for its first vehicle dedicated to gaming, as it doubles down on an investment thesis centered in the metaverse.

The firm is among the loudest proponents of Web3 and the metaverse, eyeing games as a test case for fundamentally new ways of interacting with virtual worlds that will spill over into how people work and socialize.
 
The fund's debut comes amid a global cryptocurrency sell-off that has reportedly wiped out about a trillion dollars in value. Meanwhile, shares of Roblox, whose gaming platform is seen as a precursor to the metaverse, are down more than 65% since the beginning of this year.

Since 2021, about half of a16z's gaming investments have gone toward blockchain and crypto startups, according to PitchBook data. That portfolio includes some of the sector's most well-funded companies, including Forte, Dapper Labs and "Axie Infinity" parent Sky Mavis.

While the current wave of blockchain games relies too heavily on novelty, the next generation is likely to bring experiences that combine the excitement factor of mainstream games with new ways of transacting and owning digital assets, said PitchBook analyst Ryan Vaswani.

"All else being equal, players are more likely to favor games that reward them for playing," he added.

Andreessen Horowitz has also backed more mainstream gaming firms in recent years, including developer-focused Overwolf, esports platform Sleeper and virtual reality company Sandbox VR. The firm's early investments in the gaming sector include Zynga and Oculus.

The new fund will invest in gaming infrastructure as well as studios and consumer applications. Andrew Chen, Jonathan Lai and James Gwertzman are leading the vehicle, which has also brought in a team of founders tied to a16z's previous gaming investments, including Zynga founder Mark Pincus, Roblox founder David Baszucki and Sky Mavis co-founders Aleks Larsen and Jeffrey Zirlin.

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